Can Apple Pay, Google Pay drive loyalty enrollment for restaurants?

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Paytronix has spent the last few years developing a streamlined enrollment process for restaurants’ loyalty programs, but it relies on something relatively few consumers use: Apple Pay and Google Pay at the point of sale.

At Panera Bread, Jimmy John’s Gourmet Sandwiches and Yogurtland, Paytronix is testing a system that prompts new consumers to join those companies’ loyalty programs when they pay with either Apple Pay or Google Pay, simply by pressing “yes.”

Customers agreeing to join the loyalty program are instantly registered to earn and redeem rewards, cutting out multiple steps compared with the typical restaurant loyalty-program enrollment process.

“Most loyalty programs require consumers to perform a series of actions to sign up, and users also have to identify themselves again on every subsequent visit, which creates friction in routine use,” said Andrew Robbins, Paytronix’s president and co-founder.

Newton, Mass.-based Paytronix—which last year received a $65 million funding boost from Great Hill Partners to develop restaurant payments and loyalty technology—spent more than two years developing its new process leveraging Apple Pay and Google Pay.

“When we started working on this a few years ago, it was way harder than we thought, requiring a lot of collaboration with banks, acquirers and payment terminal makers,” Robbins said.

It’s also a risky bet, since relatively few consumers are using Apple Pay or Google Pay to check out at quick-service restaurants.

But Robbins is bullish on the future of mobile payments.

“It’s true that mobile wallet adoption in the U.S. is lower than adoption rates we’ve seen globally, but as more merchants enable NFC payments, we expect to see a surge of usage,” Robbins said.

This year many banks including JPMorgan Chase and Wells Fargo committed to contactless card technology. This is likely to expand the base of merchants supporting mobile payments.

But even if proximity mobile payments have been slow to catch on, the number of restaurant transactions originating with devices for online pickup and delivery—including via the internet of things—is steadily climbing, and combining loyalty with payments will become increasingly critical for merchants, according to Robbins.

“Clearly NFC payment and smart identification is the future for the guest engagement channel,” Robbins said.

Panera has been testing the new sign-up process for its longstanding MyPanera loyalty program at many of its stores over the last nine months, and this project dovetails with Panera’s digital-forward strategy for payments.

Panera CEO Blaine Hurst late last year told CNBC the bakery chain is exploring voice-ordering capabilities and hopes to further leverage mobile devices and AI to anticipate and customize consumers’ orders.

Paytronix sees opportunities to deeply embed its mobile wallet-powered loyalty enrollment process within many restaurants’ operations.

Jimmy John’s began testing Paytronix’s mobile wallet enrollment approach a month ago at its outlets in Illinois and Wisconsin, and Yogurtland will begin using the process later this spring.

“As restaurants lean more on technology, there will need to be an intersection of loyalty and payments that’s secure, convenient, fast and incents consumers to spend more by rewarding them appropriately,” Robbins said.

Initial results from the first several months of testing at all participating stores suggest customers who sign up and pay via the new process are spending up to 20% more per year—or about $50—according to Robbins. Of those who use Apple Pay, loyalty program participation has tripled, he said.

Apple Pay users who have joined a loyalty program through the process tend to skew younger than average customers and visit the restaurants more frequently, Robbins said.

“The industry is still in the early stages of seeing how technology is going to change the way restaurants engage consumers through digital channels, but we’re investing in core technology that builds engagement and loyalty into payments,” Robbins said.

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Apple Pay Google Pay Loyalty and rewards